Financial Literacy and Emergency Saving

Babiarz, Patryk; Robb, Cliff A.

doi:10.1007/s10834-013-9369-9

Cited by 178 publications

(168 citation statements)

References 30 publications

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“…And despite demographic variables predicting emergency savings in earlier research (Babiarz and Robb 2013), our demographic variables explained a modest amount of variance (R 2 = .26) compared to the model with just two psychological variables. Furthermore, seemingly important demographic variables like income and employment did not affect self-reported financial buffer saving.…”

contrasting

confidence: 76%

“…While objective (i.e. accurate) financial knowledge relates to more saving (Babiarz and Robb 2013;Mahdzan and Tabiani 2013), it only explains modest amounts of variance in self-reported financial behaviours (Lusardi 2008;Lusardi and Mitchell 2005). Furthermore, knowledge about behaviour has little to do with actually performing it (Ajzen et al 2011).…”

Section: Subjective Financial Knowledgementioning

confidence: 99%

“…One particular critique is that incomes have dropped in recent years while individual responsibilities have increased (Chan 2006), reducing individuals' financial resources. But resources like a financial buffer serve as a personal risk management strategy against financial setbacks, which range from unemployment and unexpected medical costs to necessary expenditures on a home or vehicle (Babiarz and Robb 2013). Furthermore, a financial buffer also provides psychological benefits: individuals with less than $500 in emergency savings, compared to those who have more than this, are more likely to frequently worry, lose sleep, suffer from health problems and have a lower work productivity (Brobeck 2008).…”

Section: Introductionmentioning

confidence: 99%

“…These findings are alarming, especially given the unknown timing of many expenditures related to adverse events (e.g. job loss, medical costs) (Babiarz and Robb 2013). This questions how self-reliant individuals can be when financial resources are scarce or simply not available.…”

Section: Introductionmentioning

confidence: 99%

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Psychological determinants of financial buffer saving: the influence of financial risk tolerance and regulatory focus

Magendans

Gutteling

Zebel

2016

Journal of Risk Research

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With governments redistributing more responsibilities unto citizens, individuals have an increasing need for financial resources acting as a buffer against life's setbacks and unexpected expenditures. The purpose of this study was to examine psychological determinants of saving for a financial buffer, for which a theoretical model was formulated based on the theory of planned behaviour with three new, domain-specific psychological constructs: financial risk tolerance, regulatory focus and perceived saving barriers. Data were collected with an online questionnaire that utilised convenience and snowball sampling to target both students and working individuals (N = 272). Regression analyses offered support for the proposed model, showing that participants' financial risk tolerance (i.e. an individual's attitude towards financial risk taking) was significantly associated with their subjective financial knowledge and regulatory focus. Furthermore, perceived financial self-efficacy and financial risk tolerance both predicted participants' intention to save for a financial buffer. In turn, perceived financial selfefficacy and saving intention predicted self-reported saving behaviour. Importantly, perceived saving barriers mediated the relationship between saving intention and self-reported saving behaviour. In line with the proposed model, results also showed that a specific attitude-based construct (financial risk tolerance) is a considerably better predictor of saving intention than general measures of attitude towards saving. This study is also the first to demonstrate that regulatory focus influences financial risk tolerance. Implications of these findings for stimulating saving behaviour are discussed.

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contrasting

confidence: 76%

Section: Subjective Financial Knowledgementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Psychological determinants of financial buffer saving: the influence of financial risk tolerance and regulatory focus

Magendans

Gutteling

Zebel

2016

Journal of Risk Research

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“…The students who indicated they were certainly not able to come up with $2,000 in the next month were also the least financially literate of any subgroup in Figure 3. This relationship is consistent with national trends in Babiarz and Robb (2013).…”

Section: All Four Itemssupporting

confidence: 87%

The state of financial knowledge in college: New evidence from a national survey

Anderson¹,

Conzelmann²,

Lacy³

2018

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Exploring the relationships between impatience, savings automation, and financial welfare

Middlewood¹,

Chin²,

Johnson³

et al. 2018

Fin Plan Rev

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The Behavioral Life‐Cycle hypothesis (Thaler & Shefrin, ) models consumers as having both impatient “doer” preferences, representing their desire to spend now, and patient “planner” preferences, representing long‐run welfare considerations. The Behavioral Life‐Cycle hypothesis suggests that those with doer preferences may benefit from strategies that constrain their present behavior and promote saving for the future, like automating deposits into savings accounts. We analyze over 4,000 responses from the nationally representative National Financial Well‐Being Survey to (a) describe consumer characteristics associated with the decision to automate savings deposits, and (b) explore whether automation is related to improved financial welfare, especially for impatient consumers. We find that savings automation is positively associated with financial socialization (whether the respondent's family discussed financial matters growing up) and financial skill (the ability to act on financial knowledge). We also find that impatient consumers—relative to those with stronger planner preferences—have fewer liquid savings, lower financial well‐being, less confidence in their ability to raise $2,000, and more difficulty paying bills. However, as predicted, these differences between consumers with doer and planner preferences largely disappear for those who automate savings deposits. We discuss implications of this research for financial planners in helping clients improve financial welfare.

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Financial Literacy and Emergency Saving

Cited by 178 publications

References 30 publications

Psychological determinants of financial buffer saving: the influence of financial risk tolerance and regulatory focus

Psychological determinants of financial buffer saving: the influence of financial risk tolerance and regulatory focus

The state of financial knowledge in college: New evidence from a national survey

Exploring the relationships between impatience, savings automation, and financial welfare

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